The death of a loved one can be overwhelming. Adding legal mumbo jumbo and complex rules to the mix can be a recipe for sleepless nights.
Probate is the legal process through which a deceased person’s estate assets are legally distributed to heirs and beneficiaries. Sometimes probate is necessary, and other times it can be avoided.
Forms of Wills
The first question you might ask is, how probate laws work in California? A will is a legal document that lets an individual, known as the testator, choose how they would like their property to be distributed after death. The document can also help prevent disputes among beneficiaries. Consulting with an attorney when creating a will is a good idea.
California’s probate laws are similar to those of other states. However, some differences do exist. For example, the state does not recognize oral wills and only acknowledges holographic wills if they meet specific requirements. The testator must be at least 18 years old and of sound mind when writing the will. They must also sign the will in front of at least two witnesses. The witnesses must be disinterested and cannot receive any gifts from the estate. The witnesses must also sign a statement that the testator signed the will under penalty of perjury. A holographic will that meets these requirements is considered to be self-proving.
The testator can waive the bond requirement for their representative by signing a waiver form attached to the Petition for Probate. The personal representative must also provide a list of all the estate assets and their current value to the court. This information is required to determine if the estate is insolvent. If so, the executor must pay creditors before distributing assets to beneficiaries.
Executors
In addition to handling the wishes and instructions of the deceased, an executor must pay any debts the estate owes and report the estate’s financial status to the court. The executor is also responsible for ensuring the estate is taxed correctly. An executor must open an estate checking, and savings account to hold liquid assets over and above expenses. Generally, the executor must be a California resident with reasonable prudence and judgment. The person doesn’t have to be a legal or financial expert but must be careful, honest, loyal, and impartial. Sometimes, the court will approve “extraordinary fees” to compensate an executor or administrator for services above and beyond the routine.
The heirs and beneficiaries must be identified, and the estate assets must be compiled in an inventory. The executor must also file state income taxes, fiduciary income taxes during the probate period, and estate taxes.
If the estate is small, the executor may not be required to post a bond. However, if the estate is large, the executor must be bonded or waive the requirement. Beneficiaries can write that they’ll accept an executor who isn’t connected. Still, these waivers must be attached to the initial petition to the probate court to confirm the appointment.
Notices to Creditors
When someone dies, getting a head start on probate is a good idea by collecting necessary information and tackling the tasks you need to complete. For example, find a safe place to store any estate assets you oversee and order several certified copies of the death certificate, which will be necessary for many of your duties.
The other major step is to notify creditors (people that a deceased person owed money or property). California has strict requirements for this notification, and it’s essential to understand the intricacies. The executor or administrator has to identify known and reasonably ascertainable creditors and mail or personally deliver them notice that the estate administration has begun. This is done by searching the Decedent’s mail, credit reports, and bills and determining who is owed what.
Then, each creditor must submit a claim detailing how much they believe is owed to the estate. The personal representative must review the claims and approve or deny them. For approved claims, the personal representative must pay them from the estate. For denied claims, the personal representative must notify the creditor that their claim has been rejected and they have 90 days to file suit.
Distribution of Assets
Probate is designed to ensure that assets are distributed to the heirs following the deceased’s Will or applicable law if no Will exists. It is also intended to make sure that all legitimate debts are paid. This is especially important in cases where real estate is involved since the estate must pay any mortgage or tax owed on the property at the time of death.
It is important to remember that probate is a Court process and that, with few exceptions, all filings during probate are public records. This includes the Decedent’s Will and financial information, names of the Executor/Administrator and their attorney, and the heirs/beneficiaries of the estate.
Another purpose of probate is to see if the Decedent owed anyone money at the time of their death and to give them a fixed amount of time to come forward and claim payment. This is important for those with significant mortgages or unpaid business debts.
It is important to note that if assets are transferred through a revocable living trust or joint tenancy, they are not subject to probate and do not need to be liquidated. In addition, if the estate’s value is below a certain level, it may be possible to avoid probate altogether by going through a short/expedited probate process called “summary” probate.
